The half inch nobody catches until the plant statement posts
You sell square yards and you buy tons, so an overrun in the mat never reaches the pay app. It reaches the scale tickets, and most of those never get reconciled.
A drywall sub buys sheets and bills the same sheets, so an overrun announces itself at the supply house. Paving converts tons into square yards through a field setting adjusted by a person standing on a machine, and the conversion is invisible to the paver operator, to the GC, and to the progress estimate. That's why yield has to live in the job cost structure ticket by ticket, and why a monthly plant statement is far too late to be a control.
The size of it
On 10,000 square yards that eighth of an inch is roughly 69 extra tons, and at $95 a ton that's about $6,500 against a job whose whole margin might be $30,000. One screed setting destroys three to four points of gross profit, and you find it 45 days later or not at all.
Yield overrun is the hardest margin leak in paving to catch, because the unit you sell and the unit you buy are two different physical things that only meet on a scale ticket. Asphalt runs about 110 pounds per square yard per inch, so a screed set an eighth of an inch heavy on a 2-inch mat overruns tonnage by 6.25 percent across the whole placement. Nothing about that looks wrong in the field, because the mat looks right and both the billed square yards and the plan quantity check out. Compaction, crown, and a soft base all push the same direction, so the loss compounds, and there's no line on the pay application where it can ever surface.
Three moves, in order
Step 01: Job cost structure
Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words.
What else costs paving contractors money
The same mechanism in other trades
What paving owners ask
Why does my asphalt tonnage come in over the estimate?
You sell square yards and you buy tons, so an overrun in the mat never reaches the pay app. It reaches the scale tickets, and most of those never get reconciled.
What does it cost?
On 10,000 square yards that eighth of an inch is roughly 69 extra tons, and at $95 a ton that's about $6,500 against a job whose whole margin might be $30,000. One screed setting destroys three to four points of gross profit, and you find it 45 days later or not at all.
What do I do first?
Set a target tons per square yard for each mix and each lift during takeoff, and put that number on the crew's day sheet.
What are paving contractors supposed to be making?
Paving runs 20% gross margin, 14% overhead and 6% net profit before taxes at $1M–$5M. The all-trade average is 7%, so this trade sits 1 points below it. The CFOS target is 10%.
Which part of the system fixes it?
The step is number 01, job cost structure. Seven cost categories and three levels of granularity, built so the estimate and the ledger use the same words. It comes from chapter 1 of CONTROL: The Construction Financial Operating System.
